TSX up Wednesday morning after string of losses

TORONTO – The Toronto stock market was higher late-morning Wednesday as buyers moved in after anxiety over Greece’s possible exit from the eurozone had sparked a string of selloffs.

The S&P/TSX composite index gained 56.87 points to 11,399.92. The market had plunged about 400 points over the past three sessions alone, leaving the TSX at its lowest levels since October.

“Today is a rebound on oversold conditions,” said Jeff Bradacs, portfolio manager at Manulife Asset Management.

“And we’re seeing that coming from strength coming from materials and energy sectors, sectors that have been hard hit with the selloff due to the European concerns.”

The TSX Venture Exchange eased 2.66 points to 1,237.41.

But the hunt for safety continued to punish the Canadian dollar, which was down 0.32 of a cent at 99 cents US.

U.S. markets were positive as traders awaited the release of the minutes of the latest meeting of the U.S. Federal Reserve for any hints the central bank is contemplating another round of stimulus for a slowing economy.

Greece has weighed heavily on buying sentiment since an inconclusive election May 6 left no party with enough votes to form a government and Greeks will go back to the polls on June 17.

Many Greeks voted for parties that had been on the fringe of the political spectrum and which want to see the country abandon the tough austerity measures adopted in return for the huge international bailouts that are propping up that country.

Without agreeing to another round of austerity measures, it’s conceivable that Greece’s partners in the eurozone will withhold the next round of bailout cash. An exit from the euro might then become inevitable.

If Greece leaves the euro, then a precedent would be set that could be taken up by other countries burdened by high debt levels.

The flight from risk continued to drive commodities lower since no one knows how much damage a chaotic Greek exit from the eurozone would have on the broader global economy.

But the higher U.S. dollar has also hammered prices for oil and metals. That’s because prices are denominated in U.S. dollars and a higher greenback makes oil and metals more expensive for holders of other currencies.

And even before Greece reoccuppied centre stage on markets, commodities and resource stocks were losing ground amid signs of a slowing global economy.

“And a lot of concern there rests on China,” Bradacs said.

“Growth in China has been slowing from a very high pace. To get those stocks moving again we need to see more accomodative moves from China to really move our commodity stocks.”

On the TSX, the base metals sector was ahead 2.6 per cent as copper prices continued to slide with the July contract down five cents to US$3.46 a pound, its lowest level since early January. The metal, viewed as an economic barometer since it is used in so many industries, has plunged 10 per cent this month. Ivanhoe Mines (TSX:IVN) climbed 35 cents to $9.10 while First Quantum Minerals (TSX:FM) ran up $1.06 to C$17.90.

Investors also sold off bullion, which was down $18.10 to US$1,539 an ounce, a price not seen since late December. But the gold sector ticked 1.4 per cent higher and Barrick Gold Corp. (TSX:ABX) climbed 43 cents to C$35.66 and Goldcorp Inc. (TSX:G) improved 54 cents to $33.29.

The June crude contract on the New York Mercantile Exchange lost 64 cents to US$93.34, its lowest level since last November. But the energy sector moved up 0.58 per cent and Suncor Energy (TSX:SU) rose 16 cents to C$27.83 and Canadian Natural Resources (TSX:CNQ) advanced 24 cents to $29.68.

Industrial stocks also supported the TSX, with Canadian Pacific Railway (TSX:CP) up $2.22 to $76.39, a day before CP’s annual meeting. Shareholders will vote on a proposal from Pershing Square Capital Management, its biggest shareholder, to install a new slate of directors and replace CEO Fred Green with former Canadian National CEO Hunter Harrison.

Canadian National Railways (TSX:CNR) was up $1 to $83.15.

The deterioration in investor confidence has left the TSX at its worst level since early October of last year, down more than 10 per cent from its most recent highs registered at the end of February.

European bourses turned positive with London’s FTSE 100 index up 0.03 per cent, Frankfurt’s DAX ahead 0.34 per cent and the Paris CAC 40 up 0.07 per cent.

On the earnings front, Centerra Gold Inc. (TSX:CG) swung to a US$14.7-million loss in the first quarter as production problems sharply reduced output and sent costs soaring. But the miner declared its first quarterly dividend Tuesday — four cents per share. Its shares faded 56 cents to $9.13.

And in the U.S., agriculture equipment giant Deere and Co. posted a quarterly profit of US$1.06 billion, up 17 per cent from a year ago. Revenue jumped 12 per cent to $10 billion. The company is raising its outlook for the year, with farm receipts expected to hit historic highs but its shares fell $1.41 to US$75.21.